My Simple Trading System

February 27, 2007 at 5:12 am | Posted in Forex | 18 Comments

Hi,

I want to post my very simple trading system, for those of you who’s a beginner in Forex I strongly recommend you to follow and familiarize yourself with this simple system. The purpose of this system is to identify trend so that we can place trade following the trend. Your profit target in the beginning should not be set too high.. it is sufficient to set profit target at +10 pips.

First we need to identify the main trend, for this purpose we will use the 4 hour timeframe chart

The 4 hour chart settings as follow :

• 5 EMA applied to the close
• 10 EMA applied to the close
• Stochastics (10 , 3 , 3)
• RSI 9

Next chart we will use is the 15 mins timeframe chart, if the main trend in the 4 hr chart is going up we will look to trade long (buy) in the 15 mins chart, if the 4 hr chart is trending down we will be looking to open short position. This is the entry rules on the 15 mins chart after we have confirm our trend on the 4 hr chart :

Long Trade Rules :

1. 5 EMA must cross above the 10 EMA (indicated on the chart by the black candle).
2. RSI must be greater than 50.
3. Stochastics must be headed up and not in overbought territory.
4. MACD histogram must go from negative to positive OR be negative and start to increase in value (we want to catch the trend early so the MACD histogram must be negative)

Refer this chart for long trade rules :

Short Trade Rules :

1. 5 EMA must cross below the 10 EMA (indicated on the chart by purple candle)
2. RSI must be less than 50.
3. Stochastics must be headed down and not in oversold territory.
4. MACD histogram must go from positive to negative OR be positive and start to decrease in value (we want to catch the trend early so the MACD histogram must be positive)

Refer this chart for short trade rules :

15 minutes chart setup

• 5 EMA applied to the close
• 10 EMA applied to the close
• RSI (9)
• Stochastics (10 , 3 , 3)
• MACD Histogram (12 , 26 , 9 )